Knocked down ACs catch consumers' fancy

It is a trend that is slowly but steadily gaining ground among domestic home appliance manufacturers. Knocked down split air conditioners (ACs) are increasingly becoming popular with consumers, thanks to a steep hike in the price of regular split ACs.

In the last year-and-a-half, the price of split ACs has increased by 15-20 per cent due to a sharp fall of the rupee against the dollar. Since August 2011, the rupee is down 22.5 per cent.

Knocked down split ACs will have less features compared to a regular split AC, but will be priced cheaper. A regular split AC today costs nothing less than Rs 24,000 to Rs 25,000. With added features, split AC prices shoot up to Rs 30,000 and above, making it almost unviable for first-time buyers and people in small towns and cities, say experts.

This in turn is pushing up the demand for budget models, which are priced between Rs 19,000-22,000. Some companies already have a headstart in this area.

Almost 22 per cent of Japanese major Panasonic Corp's 450,000 units sold last year came from this segment, says divisional deputy managing director Suresh Kumar Bandi. This year, Panasonic is looking to boost its sales to 140,000 units from this market. "For this, we have increased our line-up of products in this segment. We have two models in this segment now — one priced at Rs 19,000 (for a 1.25-tonne split AC) and the other at around Rs 22,000 (for a 1.6-tonne split AC)," he adds.

But Panasonic will not be alone in its endeavour to tap this market. Rivals Blue Star Ltd and Voltas Ltd are some of the other players eying this market. B Thiagarajan, president (air-conditioning and refrigeration products group), Blue Star, says his company is working on a plan to launch low-cost, entry-level split ACs that would be priced on par with window ACs. "Our target market will be small towns. We find that theft is a big issue with window AC users in this market. Clearly, there is potential for split ACs to pick up, provided the price is affordable. We are in the process of providing this option to them," he says.

Voltas, on the other hand, is contemplating the launch of a 1.25-tonne AC, priced at aboutRs 22,000, in an attempt to strengthen its budget range of models, which starts at Rs 18,000-19,000 for a 0.8-tonne and goes up to Rs 25,000 for a 1.5-tonne split AC. A 1-tonne model from the company is available at Rs 20,000-21,000. The 1.25-tonne model is expected to complete its line-up, trade sources say.

While companies such as Hitachi Ltd, Godrej Appliances and Daikin say they have no plans to get into the space at the moment, market experts opine it will be difficult to ignore this segment after a while. "This is an emerging segment and one that will grow as regular AC prices continue to shoot up, thanks to currency fluctuations and rising cost of production," says the sales head of a home appliance company, who declined to be named.

Typically, makers of budget AC models opt for the use of aluminium over copper, the metal used commonly in regular air conditioners. This brings down the cost of production, which is then passed on to the consumer.